In most cases, when a home buyer needs funds for a home purchase, they approach a mortgage lender or bank. I generally recommend that they first seek out a local lender, bank, AND broker and compare their full range of options.

If a buyer does not qualify for a traditional mortgage, but can contribute a substantial down payment and is willing to accept an above market rate, he or she can look into obtaining a “hard money” loan – generally a private investor that is willing to partner in the purchase based on the equity in the property. Hard money loans are very expensive in comparison to traditional loans – because they often carry a much higher degree of risk for the lender. (Some investors prefer hard-money loans for the quick availability of funds, pay the loans off quickly to maintain their ability to profit from the purchase).

There are both ethical/reputable hard money lenders and unethical hard money lenders. Try to stay local, get another investor’s recommendation, ask for references, and meet face to face in the lender’s place of business if at all possible.

Perhaps you mean skipping the process of obtaining a mortgage, and instead partnering with another buyer that has cash to purchase the home? Your local real estate investment groups may be a good source of willing partners (provided you also bring something to the transaction – perhaps they will pay, but you will do the repairs?) – a partial list of such clubs can be found here:

Also get to know your local real estate professional community (agents that are listing the homes you want to buy) – they may be able to connect you with similarly minded investors for partnership.

BE CAREFUL that you do NOT mean a “straw buyer” set up – meaning, the other person buys the house and puts a mortgage loan in his or her name instead of yours, even though you plan to pay for it and own it – thus misleading the bank (because you are the one that plans to make the payments, not the “investor”). I often hear people say “it is my house, but I put it in his or her name”. Though many people dont realize it, this is considered fraud, and carries legal penalties in many areas. Search engine “straw buyer mortgage” or similar for many cases tried and pending.

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